GBM Recap: The astonishing rise of the IPO in the Middle East

Given the unprecedented deal activity the Middle East has seen recently, it's no surprise that this year's GBM event was lively and upbeat. And the region is actively laying the groundwork for even greater success in the coming years by supporting policy reform, strengthening banking relationships and leveraging electronification to enhance the region's competitiveness on a global scale.

IPOs reach a new high

The Middle East's position as a rapidly emerging market was a recurring theme in panel discussions. The region's strong traditional banking sector saw a 10% increase in brand value in 2024 and the investment in fintech topped $700 million. This robust infrastructure is helping to support one of the world's busiest destinations for IPOs.

In 2024, the GCC region saw 55 IPOs valued at nearly $13 billion, including a $580 million Dubai REIT. Dubai also saw one of the largest global tech IPOs of 2024, when on-demand delivery platform Talabat raised $2 billion, and the city's primary markets attracted more than 130,000 new investors in 2024, 86% of which were from outside the UAE. Overall, Gulf IPOs accounted for more than 10% of total global IPO fundraising during the period. The region also saw 24 follow-on offerings in 2024, indicating an active and attractive post-IPO market.

New challenges ahead

This level of success comes with a new set of challenges. To maintain its momentum in an increasingly competitive deal environment, the region needs to be able to attract investors, serve issuers and facilitate stock purchases and trades at scale under complicated market conditions.

At a time when banks are facing higher levels of service complexity and market volatility, they are also being called on to answer some tough questions. When evaluating a banking partner, investors want to know what they offer that other banks can't, and issuers want to know how they are leveraging data to formulate effective IPO strategies. For institutions that still rely on spreadsheets and manual processes, these rising expectations are a wake-up call.

The digital revolution

With less legacy infrastructure to hold them back, banking institutions across MENA are uniquely positioned to accelerate the electronification of their processes that can help them navigate complex markets and deliver differentiated services and insights.

Multi-bank complexity

As larger deal sizes become the norm, book-building increasingly involves a coordinated effort between regional and global banks. Solutions such as S&P Global's enables banks to share deal information in real-time, automate the IPO lifecycle from origination to post-settlement and generate deeper deal intelligence. The result is an IPO that delivers a better experience and optimal outcomes for issuers. Equity Bookbuild is now used by virtually every bank in the U.S., and it will be interesting to see the impact it has on banks in the Middle East as they begin to adopt this technology.

Market volatility

Managing market volatility is another area where electronification can deliver value to the region's banks. For years, the U.S. markets have mitigated market volatility by leveraging regulated practices such as “testing the waters” and “wall crossing”, which involves pre-marketing an IPO and follow-on offerings, respectively, to a small group of investors. Because both must be carefully controlled to avoid the perception of insider trading, managing the process manually can be fraught with risk. Automating the process on a platform like Equity Bookbuild reduces that risk significantly and facilitates greater transparency and control.

Deal analysis

Some of the most promising technologies for the primary markets are those that apply analytics and AI to IPO market data. AI-powered analytic platforms are enabling banks to harness system and market data to predict factors such as trading activity, the ideal investor base and the best pricing strategy for deals. The Equity Deals Database, a global, real-time dataset, is an example of the depth and breadth of data that banks can now leverage to refine the IPO strategy. With a coverage count of 300,000+ deals that date back to 2001, this resource consolidates all public data on new issuance in specific sectors, regions and other criteria. Through APIs or feeds, banks can use the data to build a reference point and formulate a winning strategy for pitching new business.

The electronified IPO

This year's GMB event confirmed that the Middle East has a robust and rapidly growing primary market. If banks in the region can keep pace with the opportunity that lies before them, it is on track to become a global hotspot for IPOs.

It's equally clear that technology adoption and increased electronification will be crucial to the region's continued success. It was exciting to be in the same room with the people who are part of this global success story, and equally exciting to know that S&P Global's AI-driven workflow, data and analytics solutions have a role to play in helping them realize their ambitious goals for the future.